Competitive organizations can be thought to exist in value producing, value exchanging, or value consuming states. A value producer is an organization whose strategic intent is to utilize factors of production, including people, process, technology, and financial capital, in order to create a product or service that is envisioned to provide utility and value to a third party. A value exchanger represents an organization that leverages its strengths in “brokering” relationships through sophisticated consultative services such as investment banking, or less complex efforts such as a directory provider of names, addresses, and telephone numbers. A value consumer is an organization that “destroys” value through its use, gaining some form of utility usually in exchange for cash or some payment in kind.
These states are not mutually exclusive. In other words, a manufacturer of industrial components can potentially occupy all three states: (i) value producing through raw material and labor conversion to finished product; (ii) value exchanging through an internal sales force or affiliated distribution network; and (iii) value consuming through the procurement of technology or materials required in the manufacturing process. The critical questions to be addressed are: should an organization occupy all three states, or two, or just one; and which of the states, how, and when?
Different organizations may have complementary core competencies. To the extent these can be effectively shared, an organization can form a strategic alliance with other organizations that demonstrate superior capabilities in given areas to leverage the assets or methods of the more value-producing organization. In so doing, the organization may actually have to remove a less efficient portion of its own value-producing process and replace it with an equivalent functionality provided by the organization with the superior capability. The organization may not have the luxury of not choosing this strategy because in a competitive environment a more nimble value-maximizing organization often supplants the inferior capabilities of a recalcitrant organization by providing better, cheaper, and faster products and services enabled by its superior capabilities. However, by examining business processes and identifying distinguishing core competencies, an organization can undertake an “as-is” versus “should-be” analysis, thereby identifying strengths and vulnerabilities in its organizational structures and plans. This information may then be used to enable the organization to create “best in class” business processes, products, and services.
Historically, organizations have employed ad-hoc methods to perform competitive analyses in order to understand their strengths, weaknesses, opportunities, and threats. Such analyses often incorporate both public domain and privately obtained information around such factors as product or service diversity, quality, price, support, distribution channels, and supply chain efficiencies, amongst a myriad of other organization and industry specific factors. As a result, the amount of information to be synthesized, including the choice of competitive factors, the relationship among the factors, and the subjective or objective value placed on these factors, presents an overwhelming challenge to the analyst in conveying meaningful and optimal conclusions.
What is needed is a reproducible and robust process that allows both business analysts and management decision makers alike to distill a compendium of complex information into a visualization that depicts the competitive state of the organization, thereby providing enhanced management decision direction and support. What is further needed is the ability to create visual surfaces depicting both a subject organization, its direct competitors, and third party complementary organizations, to enable the business manager to more readily optimize a selection of strategic partners, compare alternative business combination strategies, and refine its own competitive approach.